Obama has loudly insisted that any deal must include higher taxes on “the rich,” who he has long defined as those earning $250,000 or more per year. (He briefly amended that figure upward to $400,000, but did not accompany his proposal with any detailed spending cuts in return, meaning that it was not a serious offer.)
Most congressional Republicans, meanwhile, have insisted on no increase in tax rates for anyone, regardless of their income level. Their preferred method of dealing with the budget crisis is by cutting spending.
Obama demands that wealthy Americans pay “their fair share,” even though they already shoulder a vastly disproportionate share of the tax burden. Taxing them at a higher rate won’t bring in anywhere near enough money, and in fact is likely to bring in even less than projected.
That’s because the rich and well-to-do will just work harder to shield as much of their income as possible from the tax collector — a behavior that is perfectly legal, by the way. Obama’s demand that Republicans accede to higher taxes would seem no more likely to succeed than a demand by a Republican president that Democratic congressmen suddenly switch to a pro-life position on abortion as part of a budget deal.
Obama’s insistence on raising taxes on job creators is, on the face of it, counter-productive. Low tax rates are essential to a robust economy, and his push in the opposite direction risks tipping what’s already a stagnant economy back into a recession.
If Obama sticks to his position and the Republicans to theirs it means that taxes will go up — a lot — on everybody, including the middle class. Taxes will go up by an average of about $3,500 per household. Even the liberal Brookings Institution in Washington predicts that 90 percent of Americans will pay more. Single people making $150,000, for example, would see their taxes go up by $5,609, according to The Tax Foundation. Married couples making a combined $150,000 (considerably less than Obama’s so-called “rich”) would see their taxes climb by $6,616. And let’s not forget the Obamacare tax increases that are just around the corner.
It’s a lousy deal for most Americans — but not for Obama and his liberal allies on Capitol Hill. In fact, they’re likely to come out smelling like a rose, if the suck-up mainstream media plays its usual role.
Blame for the plunge — and the resulting higher taxes — will be heaped on Boehner and Republicans. Meanwhile, Obama and his liberal allies will enjoy a surge of new revenue and without having to make any significant spending cuts in exchange — except when it comes to the Defense budget, which will continue to be Target 1 for them. Even better for Obama, he never again has to face the voters, especially those angered by higher taxes and those who will be booted by their employers into substandard government health insurance plans because of Obamacare.
For Obama and Capitol Hill Democrats, going off the cliff is a win-win-win proposition.
For the rest of us, it’s lose-lose-lose.
Happy New Year.